∫ California Raids Efficiency Funds

Today, PG&E, the largest utility company in California, released a statement about incentives for natural gas efficiency projects. Here’s our favorite sentence, which we will then translate to simple English:

“The recently approved State of California 2011-2012 Fiscal Year Budget (SB87) includes a provision that authorizes the transfer of funds from the Gas Public Purpose Program (PPP) Fund to the State General Fund. This provision was opposed by PG&E and significantly limits PG&E’s ability to pay gas energy-efficiency incentives and rebates.”

In English: California is out of money, so instead of raising taxes or cutting services, state legislators have chosen to rob the State’s energy efficiency programs. PG&E, and every other Investor Owned Utility (IOU) in California, will no longer be financially supporting gas efficiency programs.

In California (and New York, and many other States), everyone who pays a gas bill pays a small extra charge based on how much energy they use. This charge is collected by the utility and then used to run energy efficiency programs. The programs are heavily scrutinized and must pass what is called a Total Resource Cost test, or TRC. The TRC determines whether the program saves more money than it costs. This is determined very, very carefully and watched by many smart people and consumer protection groups.

California State and Utility programs, despite their flaws, have great TRC scores and save consumers much more money than they cost. This is driven by good old-fashioned supply and demand. By running an efficiency program and reducing demand for gas or electricity, prices fall. In California, for every dollar a consumer pays towards the gas efficiency program, their utility bill is lowered by two dollars and ten cents due to decreased gas prices. The people who actually make changes to their buildings are rewarded with rebates, and everyone else profits too. In short, the program is a fantastic use of money. It saves consumers twice as much money as they spend, and people who do good are rewarded for it with extra cash.

Until now. Now, every dollar that goes to that program will be sent to the General Fund. The California General Fund provides roads, firefighters, funding for the California State University Program, and pays the salaries of every State employee. Robbing utility programs, however, is a strange and obfuscating way to support the General Fund. Surely we can do better.

If you want to support better legislative policy, please contact the California Public Utilities Commission and ask them to reinstate the gas energy efficiency programs through a new ruling. You can help the economy and the environment at the same time.



The California PUC (the Public Utility Commission, which is responsible for regulating all utilities in the States) just put forward two proposals to help alleviate the situation. One would allow utilities to use unspent past gas efficiency money and program evaluation, measurement, and verification to continue funding the gas efficiency programs. This means instead of returning the money that wasn’t spent in previous years back to rate payers – people who pay utility bills like you, me, and your office building – the utilities can use those funds to fund this year’s efficiency programs. This is a good use of the money because every dollar spent on these efficiency programs saves rate payers two dollars. The first proposal would fill in about half of the money the Legislature raided.

The second proposal would also allow the utilities to use unspent electric efficiency money to fill in the gap, bringing us yet closer to a full reconciliation.

Please vote for the second option, which you can reference by stating you’d like to “support Commissioner Mark L. Ferron’s APD” before September 27th!


10/7 UPDATE:

The California PUC just ruled to allow the utilities to use unspent efficiency money from previous years to fill in the hole in the gas efficiency funding; the utility natural gas efficiency programs are officially back in action. This does not change or reverse the legislature’s actions in raiding efficiency funds for the California General Fund, but it does provide a stopgap measure that enables California to continue leading the way in natural gas energy efficiency. Thank you CPUC!

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